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Speaker 1

00:00

In the days when Columbus sailed the ocean and da Vinci painted the Mona Lisa, a German banker named Jacob Fugger became the richest man in history. Maybe you've heard of him, but usually his name gets blank stares. His influence rests on what he did for Austria's Hasburg family dynasty. When Fugger made his first loan to the Hasburgs, they didn't even have Vienna.

Speaker 1

00:25

By the time he finished, they had half the known world. While they got the titles, Fugger got the money. His biggest client died penniless, and he died with the biggest fortune the world has ever known. Most people become rich by spotting opportunities, pioneering new technologies, or besting opponents in negotiations.

Speaker 1

00:47

Fugger did all of that through a mix of gumption and intellect, but he had an extra quality that allowed him to rise even higher, nerve. In an era when kings had unlimited power, Fugger had the nerve to stare down the heads of state and ask them to pay back their loans with interest. 1 of his sneaky financing schemes provoked an outraged Martin Luther to start the Reformation. In his biggest contribution to finance, he got the Pope to legalize money lending.

Speaker 1

01:20

He financed Magellan's circumnavigation of the globe, and he helped defeat the mobs in the first clash between capitalism and communism. In The Richest Man Who Ever Lived, the author Greg Steinmetz for the first time gives Fugger his due. It is the ultimate untold story. That is from the inside cover of the book that I'm going to talk to you about today, which is The Richest Man Who Ever Lived, the life and times of Jacob Fugger and was written by Greg Steinmetz.

Speaker 1

01:50

Okay, so this book was actually recommended to me by my friend Eric Jorgensen. Eric is the author of the book that I covered on Founders Number 191. It's 1 of my favorite books. It's the almanac of Naval Ravikant.

Speaker 1

02:01

I think it's key for anybody trying to build a business in the age of infinite leverage. There's a ton of great ideas in that book. If you haven't listened to it, obviously read the book, but go ahead and listen to, make sure you go back and listen to episode number 191. And this is what he said about the book that I'm holding in my hand that got me interested in reading it.

Speaker 1

02:17

And it just lists some of the innovations that Jacob, I'm going to call him Jacob instead of Fugger. And you'll see why when I read this message from Eric. So he said, Jacob invented double entry bookkeeping. He had a similar fast information network advantage like the Rothschild.

Speaker 1

02:34

So I'm gonna talk a lot about how Jacob reminded me of what I learned about reading the 2 books on the Rothschild. And then they called Jacob the German Rockefeller. And you'll see there's a lot of, he had a lot of things in common with both the Rothschilds and Rockefeller. So he had a similar fast network advantage just like the Rothschild had.

Speaker 1

02:51

He was as powerful as the Pope. In fact, he bribes multiple Popes throughout the entire book. This book is absolutely insane. The events that take place in the book happened 500 years ago.

Speaker 1

03:01

His financing, Jacob's financing was decisive in a number of wars, and he knew it, and he auctioned his influence to essentially win the war. At his death, his net worth was 2% of the GDP of Europe. That's why the author makes the case that he's the richest man that ever lived. There's lots of good nuggets on Germany and European history.

Speaker 1

03:24

And I was just struck by the amount of violence that's in the book. It was just mind blowing. He was generous to some degree, but he did create social housing that is actually still in use to this day, which is really remarkable. And then here's why I want to call him Jacob instead of Fugger.

Speaker 1

03:39

It's very likely that he was the root cause, the etymology behind the word fucker. And so the book opens up with the letter that that Jacob is writing to Charles V. Really, I'm gonna pull a couple highlights here at the very beginning because this is just a very unique time. They consider Jacob probably the first capitalist, at least the first capitalist that ever did it on the scale that he did it.

Speaker 1

04:00

And it's really important because he's rather unlikable, at least that's the feeling I had when I finished the book. But part of this is like it's kind of a struggle to put into context, like the historical context of when he was operating. So I want to just pull out a couple pieces here, because I think if we do this right at the very beginning, it kind of adds the important historical context that we need to understand his story and maybe why he made some of the decisions that he made. So it says, Jacob wrote collection letters all the time, but the 1523 letter was remarkable because he addressed it not to a struggling fur trader or a cash-strapped spice importer, but to Charles V, the most powerful man on Earth.

Speaker 1

04:38

Charles ruled an empire that was the biggest since the days of ancient Rome and would not be matched until the days of Napoleon. And so this is like his I would say it's Jacob's most infamous letter sits down is like hey Charles I know you're the most powerful man on earth but you owe me money and you owe me interest and you need to pay me now so I read the entire letter it's actually reprinted and later on in the book I think this sentence right here is the 1 that is probably the most the most like Ballsy that he had to do he says it is well known that without me your majesty might not have acquired the Imperial crown You will order that the money which I have paid out with the interest shall be paid without further delay And so why did that require so much nerve? Because these are people that would just chop your head off and kill you at the slightest little insult. Nerve was essential because business was never more dangerous than in the 16th century.

Speaker 1

05:29

Cheats got their hands cut off or a hot poker through their cheek. Deadbeats would rot in prison. Bakers got dragged through the town to the taunt of mobs. And moneylenders faced their cruelest fate." So Jacob was involved in a number of businesses, but the best way to think of him is as a banker.

Speaker 1

05:48

And so at this time, he's the 1 that actually gets the law changed. They considered lending money and then collecting interest on money. It was something that was frowned upon by God. And so how extreme was this belief?

Speaker 1

06:02

Well, here's an example. To prove that lending money and interest was like a sinful and everything else, the church members dug up graves of suspected money lenders and pointed to the worms, maggots, and beetles that gorge their decaying flesh. And so there's many examples in the book where Jacob is constantly pushing the pace going further than you would suspect when the consequences of making some certain mistakes at this time in history was death. Given the consequences of failure it's a wonder that Jacob strove to rise as high as he did.

Speaker 1

06:35

He could have retired to the country and lived a life of hunting, womanizing, and feasts. Some of his heirs did just that. But this I double underline the sentence because this is a really fundamental understanding of who he was as a person. And in fact, this is what he wanted to put on his gravestone.

Speaker 1

06:51

But he wanted to see how far he could go, even if it meant risking his freedom and his soul. And so what does that mean? He liked Rockefeller. Remember, think about Jacob as the German Rockefeller.

Speaker 1

07:03

He thought that he was blessed with a talent for money-making by God. And so he couldn't retire, he couldn't live a life of leisure because God told him to make as much money as possible. And This is what he said, the Lord must have wanted him to make money, otherwise he wouldn't have given him such a talent for it. Many in the world are hostile to me, Jacob said, but I am rich by God's grace.

Speaker 1

07:26

That is exactly what Rockefeller believed. He thought God gave him a talent to making money and that his job was to make as much money as possible and then give as much of it as way as possible. So Jacob did not give, he's not gonna do that second part though. He's gonna collect as much as he can.

Speaker 1

07:41

So let me go into a little bit about his early life, his personality, his businesses. Really, this is just more context for the story I think is extremely helpful to try to understand this very difficult person this is the reason I want to read stories like the book that have my hand is because this personality type is still walks the surf and these are people I want to know they exist and then I want to avoid them. He is reminds me of what Charlie Munger said when he said that wise people want to avoid other people who are just total rat poison. And there's a lot of those such people.

Speaker 1

08:11

And you'll see what I mean as we go through this story. It's wild. Okay, So Jacob was the first anywhere to consolidate the returns of multiple operations in a single financial statement, a breakthrough that let him survey his financial empire with a single glance and always know where his finances stood. So it's really important that a lot of the stuff that he innovated on, Like this is just the world that we live in.

Speaker 1

08:32

It's like normal to us. There's a blurb on the front of the book that is from the author of this book called The Barbarians at the Gate, which has also been recommended to me and I might read for the podcast. But he said, Jacob wrote the playbook for everyone who keeps score with money. This is a must for anyone interested in history and the history of wealth creation.

Speaker 1

08:50

And so this idea to consolidate all my different businesses, all the different offices I have all over the world into 1 single financial statement that I can just glance and know exactly where I stand financially. He was the first person in recorded history that did that. Then he created 1 of the world's first news services that gave him an information edge over his rivals and customers. It is fair to call Jacob the most influential businessman of all time.

Speaker 1

09:13

Jacob changed history because he lived in an age when, for the first time, money made all the difference in war and hence politics. And Jacob had money. He lived in palaces and owned a collection of castles. His fortune came to just under 2% of European economic output at the time of his death.

Speaker 1

09:30

Not even Rockefeller could claim that kind of wealth. Jacob was the first documented millionaire in history. So what did he do to get that money? He made his fortune in mining and banking, but also sold textiles, spices, jewels, and holy relics such as the bones of martyrs.

Speaker 1

09:48

He held a monopoly on a Brazilian tree bark that was believed at the time to cure syphilis. Jacob's father died when he was 10 and if it was not for his strong and resourceful mother he might not have gotten anywhere Jacob was headstrong selfish that's. I'm gonna read this whole thing I should emphasize everything 1 of these words he was headstrong yes selfish deceitful and sometimes cruel. But he turned at least 1 of those flaws a tendency to trumpet his own achievements into an asset.

Speaker 1

10:19

His boasts were good advertising. And then this is the sad part this is why again I want to study him if he's got good ideas I'll grab them but most of it's like okay I'm gonna avoid this guy's fate. Did success make him happy? Probably not.

Speaker 1

10:32

He had few friends, only business associates. His only child was illegitimate. While on his deathbed, with no 1 at his other side than paid assistants, his wife was with her lover. His objective was neither comfort nor happiness.

Speaker 1

10:47

It was to stack up money until the end. Before he died, he composed his own epitaph. It was an unabashed statement of ego, and this is what I meant. This guy is wild.

Speaker 1

10:57

This is what he wrote about himself, and he's writing it in third person. Jacob Fugger was second to none. This is him writing about himself. I want to be very clear.

Speaker 1

11:05

This is like, this is what I want to be remembered for as I'm dying. Jacob Fugger was second to none in the acquisition of extraordinary wealth, impurity of life, and in greatness of soul, as he was comparable to none in life, so after death is not to be numbered among the mortal." So that's the end of his own description of himself. This is back to the author. His methods blazed the path for 5 centuries of capitalists.

Speaker 1

11:33

He was at his core an aggressive businessman doing whatever it took to achieve his ends to understand our financial system and how we got here. It pays to understand him. So the author already made a reference of how important his mother was right and the reason is is because they're in German so they're in Germany right she sends him to apprentice at the absolute best place that he could possibly apprentice because he's gonna get a start just like Rockefeller as a bookkeeper okay so he they she sends him to Venice and that is important because Venice puts commerce above religion, and Germany at the time did not. So it says, Jacob looked up to his brothers and envied them and their adventures on the road.

Speaker 1

12:12

His own chance for adventure soon came enough, when his mother secured him an apprenticeship in Venice. And why is that important? Because Venice was the most commercially minded city on earth at the time. I wonder what's the most commercially minded city on earth today?

Speaker 1

12:27

I don't know the answer. If you have an answer, let me know. Venice was founded on commerce and business. Businessmen ran the place.

Speaker 1

12:33

Money was all anyone ever talked about. And this is important because this is where he finds his life trade. It was during this time that he learned about banking. Jacob was to become many things in the ensuing years.

Speaker 1

12:44

He's an industrialist, a trader, and at times a speculator. But he was foremost a banker. Venice also exposed him to the craft of accounting. Most of the merchants back in Germany were still jotting down numbers on paper scraps that were never organized.

Speaker 1

12:57

Italians developed double entry bookkeeping. It was that it would let them understand a complex business in a quick glance by summarizing the highlights and condensing the value of the enterprise to a single figure, which is the net worth of the company, right? Now this is he took that innovation that they had and he wind up taking it 1 step further. He's like, oh that's a good idea.

Speaker 1

13:16

I'm gonna combine. I'm gonna do this So all of my disparate businesses, my entire financial empire, if you will, is condensed down to a single number. And then we're going to see another thing he had in common with Rockefeller. Remember, I think it was the last episode, maybe the episode before that, 248, when I just spent 40 hours rereading Titan and trying to do an entire podcast just about Rockefeller's climb.

Speaker 1

13:38

And so if you listen to that already, if you read the book, you already know this part. It was a fact that Jacob as a teenager already understood the importance of bookkeeping and how it gave him an edge says something that says something about his intuitive grasp of business he knew that those who kept sloppy books and overlooked details left money on the table that was something he considered unconscionable That's something Rockefeller also knew at a very early age. You know, he's 21, 22 at the time, and he's just admonishing Rockefeller that his older businessmen, they're 10, 20 years older than him about how sloppy their books are, how they're go over, They're like, they're too quick to pay the bills. Even if you could save a couple pennies, he was just absolutely relentless.

Speaker 1

14:21

And that's also why he was recruited by older businessmen to go in a partnership. They're like, okay, there's nobody else. Even though Rockefeller's younger than us, there's nobody else that's as good at bookkeeping and just the overall keeping a handle on the overall financial performance of a business and making sure that we're not wasting a penny than this guy. So then the author does a great job of explaining like, why would how could a banker become so powerful at this point in history?

Speaker 1

14:45

So says, but to make sense of his life, it helps to understand how he could exploit this odd creation and why an emperor needed a banker. So they're going to talk about this later on. I don't know if I have a highlight or not, but you can think about the role that Jacob plays as an individual is now a role that's played by institutions like governments, central banks, the International Monetary Fund, pensions. He goes into more detail later on, but at his point in history, it's a dude.

Speaker 1

15:10

It's just him. And that's why he's able to make so much money. And so at this point in European history, the leaders are building wealth through war and conquering. It is a very zero-sum game.

Speaker 1

15:21

And so if you're going to wage war and you want to essentially go in and attack other people and steal their property and enslave their people, you need a lot of soldiers and to get soldiers, you need money. And so that is the role that Jacob's going to play. And so there's a bunch of characters in European history in here. Not gonna go into too much detail because I don't want to distract us from the main story of focusing on Jacob, but he's going to team up with his first like noble person, he's gonna like discard them and you'll see how just ruthless he is.

Speaker 1

15:52

But it says, the emperor received no funding except from his own estates and thus could only field a small army. This made him easy to ignore. So this guy named Frederick decided, hey, I need to raise money, I need to have a large army and that's do that that's conquering I'm going to to produce wealth right so says the great dream of this error was to expand the family power base the winner how do you win that game in other words whoever grabbed the most titles and territories. It was a bloody business.

Speaker 1

16:20

Frederick, the guy that is going to team up with Jacob, had the fantastic notion that the imperial crown could make his family the most powerful in Europe. He believed in it so much that he stamped the initials AEI0U on his tableware. That stands for all Earth is under Austria. So that's the size of Frederick's ambition.

Speaker 1

16:41

He's like I'm going to control the Earth right? Here's the problem. The problem was that Frederick was unable to fund an imperial lifestyle and was broke. And not only is he broke, but he's stiffed a bunch of other people that have lent him money in the past.

Speaker 1

16:53

So other merchants would refuse him credit. He needs, this is where he actually is introduced into the Fugger family. Because before banking, the Fugger family business was in textiles, so like cloth and fabrics and everything else. So he's going to wind up meeting Jacob's older brother.

Speaker 1

17:08

He didn't have any money. So he says that led Frederick to Ulrich, the oldest of the Fugger brothers, that he needed his help. His Jacob's older brother gave Frederick silk and wool for his robes and all this fancy stuff that he needs. And in return, Frederick gives him a royal endorsement.

Speaker 1

17:26

The royal endorsement was well worth a few cloths from the fugures. And so essentially what just went down there is like a barter between the Emperor and Jacob's older brother. And the reason I'm bringing this to your attention is because of the lesson that Jacob learns from this story. The spectacle of the Emperor begging for help must have startled Jacob.

Speaker 1

17:47

Any belief he had, he may have had in the Emperor's superhuman qualities could not have survived the fact that mere shopkeepers, which is what they are at this point, right? Ordinary people that he saw on the street every day had denied credit to the supposedly most powerful figure in Europe. And so there's more detail in the book, but again, we live in a very different world where the people that have power usually have money to in this time, you might have power and land, you might have power and titles, you might be born into the right family. But a lot of these people didn't have a lot of money.

Speaker 1

18:20

And so people like Jacob in the 1500s, the Rothschilds a couple hundred years later, they're the ones that take advantage of the fact that the nobility or the elite or whatever you want to call them of their day were cash poor. We live in a time where that would be just absolutely ridiculous. So I'm fast forwarding the story a little bit. Jacob's 26 years old.

Speaker 1

18:39

He's like, all right, up until this point, the family had concentrated on buying and selling textiles. Right. But the profit margins are small. He's like, I need to expand.

Speaker 1

18:47

He has gigantic ambition. Right. So he's like, hey, a lot of these other elites or nobles are making a lot of money in mining. Right.

Speaker 1

18:55

And he's like, there's definitely a lot more profits in there. How can I get into a new business line that had better profit margins? And so he winds up hooking up with Frederick's cousin. And this is a weird thing.

Speaker 1

19:09

I've heard of, actually, Dan Carlin of Hardcore History is the 1 that's taught me the most about this. Because a lot of his, especially his great series on World War I about how many of like European powers were like related to each other. They'd be like cousins or sometimes like intermarried or whatever the case is. So, similar things happening here.

Speaker 1

19:26

Frederick has a cousin. It's this guy named Sigmund. Sigmund is a terrible leader, very selfish, just essentially takes all the finances, acts as if it's his own personal bank, constantly overextends himself. And this is the in that Jacob's going to figure out.

Speaker 1

19:40

He's like, oh, if I borrow, if I lend this guy money, I can actually, it's like a, almost like a side, like a flanking maneuver to get into mining. Let me read this and make more sense there. Sigmund only spent on himself when money ran out. He borrowed against the output of his minds by selling silver to a group of bankers at a discount.

Speaker 1

19:58

So eventually 1 of those bankers is going to be Jacob. He gets a discount of like, let's say 50% off from Sigmund and then immediately do geographical arbitrage. We'll send it to like Venice and other places and sell you know, 100% return or whatever the case is. He's like, Oh, I have no money.

Speaker 1

20:14

I have this thing that essentially just prints money, my silver mine, and I'll just sell it to you at a discount. Jacob wanted to be 1 of the bankers and remarkably he got in on a deal. The amount was small but it made him a banker. The profession that over the next 40 years he would take to New Heights, Jacob worked until the day he died.

Speaker 1

20:31

He dies, I think he's like 66, 65, something like that, but there is no retirement for this guy he's absolutely obsessed so he gets in when he's 26 but he's having no luck it takes 4 more years before he gets another deal And the reason that's important is because the Venetian bankers had this on lock and they wind up getting into a beef with Sigmund later on. So now they're not going to loan him any more money. And this is where Jacob, I'm fast forwarding in the story, obviously, is where Jacob's going to see his opening. He assumed his bankers would support him, but when he asked for more money, they offered only excuses.

Speaker 1

21:03

Sigmund tried his bankers 1 more time, but by now Sigmund's years of unchecked spending and mounting debt had caught up with them. The bankers refused to help. Jacob came forward with an offer. Remember, he's been trying to work with this guy for 4 years.

Speaker 1

21:13

He's like, you gave me a little bit, Then you left me out into like the wilderness. Let's do a deal together. And this is where we really see that Jacob just had this like gifted mind for business. So Jacob combined his family's money with money raised from friends and agreed to loan Sigmund the full amount.

Speaker 1

21:28

It was a whale of a deal for Jacob. It was more than 10 times the size of his earlier loan. The other bankers laughed. They couldn't believe that Jacob was willing to give Sigmund anything, let alone a bigger loan than any of them had ever made.

Speaker 1

21:41

If Sigmund repaid, Jacob would make a fortune. Remember, he's about 30 years old at the time. But if Sigmund welched and given his record, it seemed likely Jacob would be finished. To prevent ruin, this is where you see that Jacob, he's somebody I want to avoid, but he's smart.

Speaker 1

21:58

He's very clever. He's got a gifted mind, especially for this kind of stuff. To prevent ruin, Jacob filled the loan agreement with safeguards. He barred Sigmund from touching the silver.

Speaker 1

22:07

He made the mine operators co-sign the loan, and he insisted on forwarding the money to Sigmund in installments rather than as a lump sum. Jacob also insisted on control over the state treasury. Jacob wanted stability, and by controlling this country's, or this little town, what is it, like empire, by controlling their purse strings, he could act as a one-man international monetary fund. And the only reason this worked is because Sigmund had no other options.

Speaker 1

22:38

It was this or nothing. Sigmund agreed to all of Jacob's terms. He had no choice. But the agreement was only words on paper.

Speaker 1

22:45

Sigmund was the law of the land. Debtor's prison was for little people, not Archdukes. The only thing that kept him honest were his honor, which could be fleeting, right? But this is really what kept him honest.

Speaker 1

22:57

His desire to borrow again in the future. The loan marked a pivotal moment in the ascent of Jacob. There was and this is so this carries on to the next page. It's like a sentence or 2, but really, really important.

Speaker 1

23:09

I double underlined all of this here. There was this is really remarkable if you think about this, because this is like the turning point in Jacob's life, right? There was nothing pioneering or innovative about the loan. And his competitors could have made it as easily as Jacob did.

Speaker 1

23:24

All Jacob did was put up his money when no 1 else had the guts. Such out of favor investments became a hallmark of his investing career. That sentence I just re-listened to episode 103 about Hedy Green because I know Hedy Green had made the majority of her money or her wealth. She went through all these financial panics in her life, like Maybe like a half a dozen.

Speaker 1

23:46

I lost count how many. And so we have no idea what's taking place in the economy right now. And I was like, hey, you know what? It's probably a good idea for me to go back and reread my highlights from Heddy Green's book and then re-listen to that podcast.

Speaker 1

23:56

It's episode 103, if you don't know what I'm talking about. I think the book is called like the richest woman in America. But that sentence about Jacob could describe her as well as well. Such out of favor investments became a hallmark of his investing career.

Speaker 1

24:10

By this time, Jacob had made friends with Sigmund. And this is what I mean about rat poison, because he's so deceitful. Like you just can't keep these people around you. They're just so they don't actually care about you They just care what you could do for them Jacob's perfect example that by this time Jacob had made friends with Sigmund knowing the Duke was vulnerable to flattery Jacob had a had won a spot in Sigmund's heart by celebrating the greatest achievement in the Duke's otherwise disastrous reign.

Speaker 1

24:35

So it's this silver coin that celebrates Sigmund himself. He puts like, it's essentially like if you print somebody else, somebody's face that you're trying to flatter on a currency and you spread it around and you know this guy's extremely egotistic as it is so he's like falling to the flattery. The popularity of the coin attracted imitators across Europe. This was fascinating.

Speaker 1

24:56

So again I feel like Jacob's almost like historical like finance history's like Forrest Gump. He's had all these really important events. And so this idea that they're doing together, it was actually copied by the Danish and it says that the Danes called their version of Sigmund's coin, the dollar. 3 centuries later, Americans gave a nod to the Danes and ran with it.

Speaker 1

25:21

I didn't know that that was remarkable Sigmund appreciated Jacob's thoughtfulness. He stayed true to his banker, but his loyalty was one-sided soon enough. Jacob would return the Duke's loyalty by turning on him. And so this is where we see that Jacob was really only loyal to himself and his money.

Speaker 1

25:38

There's another guy that Maximilian that he's going to back and eventually he's going to overthrow Sigmund Maximilian Maximilian had a winning collection of personal attributes. He was charming and an athletic, admirers called him the last knight. He was never happier than when he was in his armor, jousting in a tournament or fighting an enemy. Remember, this is how you made money back in the day.

Speaker 1

25:59

If you were really good at killing people and overtaking empires, that's how you got rich. He was a hard worker. After a day in the field, when his captains would relax with beer around a campfire, Maximilian retired to his tent to address official correspondence. He had plenty of faults.

Speaker 1

26:14

He was moody, easily distracted, and prone to get ahead of himself. But he had intelligence, determination, physical courage, and a desire to do whatever it took to advance his family. And so think about Jacob seeing Sigmund, he's gotten close to him, understands who he is as a person. He's now studying Maximilian, he's like, oh, I'm back in the wrong horse here.

Speaker 1

26:33

Jacob correctly grasped that Maximilian would outmaneuver the dull-witted Sigmund. Maximilian did it with a ploy that Jacob himself could have devised given its ingenuity. Maximilian loaned money to Sigmund backed by a mortgage on his property. If Sigmund failed to repay in 3 years, Maximilian would take over.

Speaker 1

26:53

Sure enough, Sigmund defaulted. He could have repaid if Jacob had loaned him the money, right? You figured that your main banker, he's going to bail me out. This is where Jacob switched sides.

Speaker 1

27:05

But Jacob, who preferred the ambitious Maximilian as a customer to Sigmund, did nothing. Okay, so let's go into how Jacob worked. Entrepreneurs, investors obviously knew knowledge is profit. Jacob knew it 500 years ago.

Speaker 1

27:18

I'm gonna read this section to you, and then I wanna read this later on in the book, I'm gonna skip ahead and I'll come back, where they compare and contrast Nathan Rothschild and Jacob Fugger, which is very fascinating. So this is this information advantage that he sought out. Jacob craved market sensitive information so much that he created a system to get it first. A news service, which was the world's first.

Speaker 1

27:40

He set up a network of couriers who raced across Europe with market information, political updates and the latest gossip. Anything that would give him an edge. In the years ahead, he learned about important deaths and battle outcomes before the emperor and his competitors. Eventually, Jacob's heirs turned this information network into the world's first newspaper.

Speaker 1

28:02

These dispatches, this information, eventually looked more like newspapers than anything else. Jacob's letters preceded the first newspaper by half a century. And so what was remarkable to me is that all throughout, like if you could see the book that I have on my hand, I'm like writing down, oh man this is just like Rockefeller, oh this is just like Nathan Rothschild. And at the end, in the very epilogue, the author puts it all together for us.

Speaker 1

28:24

I just want to read you. It's about like 2 paragraphs here Which is just really fascinating About just how similar again didn't know each other. Maybe not the rush all that her about Fugger I'm not entirely sure but it's just always fascinating to me how people didn't know each other lives at different points in history and usually different geographic locations arrived at the same conclusion about what is it what is like a useful idea for their business and what's not. And then of course, if you haven't listened to, I got a ton of messages when I did.

Speaker 1

28:50

I did a two-part series on the Rothschilds. It's episode 197 and 198. Starts with the founder of Rothschilds, like the dad, and then the second book is about how the family expands. But really the family, like the son, Nathan Rothschild, who was like the third or fourth born, I can't remember at the moment.

Speaker 1

29:08

He's the 1 that really pushed the pace. He's the 1 that reminds me most of Jacob. And we're gonna see that here. Of all the businessmen in history, Nathan Rothschild came closest to matching Jacob's influence and his life and career echoed Jacob's own.

Speaker 1

29:20

Like Jacob, Rothschild came from a family of 10 children. He worked in a partnership with his brothers and although not the oldest, rose to lead the family's business because of his intelligence and daring. Rothschild began as a wholesaler of textiles and like Jacob left the textile trade for banking. His customers like Jacob's borrowed to fight the French.

Speaker 1

29:40

Rothschild loaned to the Habsburgs. They ennobled him with the title Baron. Rothschild like Jacob never used the title but his heirs did in another coincidence. Nathan Rothschild had the lease for mercury mines in Spain.

Speaker 1

29:55

I think the most profitable business single business that Jacob ever had was his mine. The mine still dominated global mercury production in the 18th century. Nathan Rothschild like Jacob exploited an informational edge. So he had that that network I just described to you.

Speaker 1

30:13

The Rothschilds were famous for having a very similar 1 of their greatest edges was the fact that they had this like countrywide, almost worldwide information advantage over everybody else. So I want to go into why Jacob was a misfit and then this gives us again great historical context on why he really, this view was important because he actually saw the truth, even though it wasn't accepted by everybody else. And so says Jacob went to church on Sunday endorsed family values and loved his king and country. But make no mistake, He was a radical.

Speaker 1

30:46

He refused to believe that noble birth made someone better than anyone else, which everybody society believed, or at least professed to believe at the time, right? For him, intelligence, talent, and effort made the man. This is the world that we live in, right? His view is now mainstream, but it was subversive at the time Jacob's worldview let him recognize his relationship with the Emperor in its true form this is what I mean about he saw the truth before anybody else did it's very fascinating it wasn't 1 of master and servant It wasn't 1 of Lord and surf.

Speaker 1

31:18

It was a relationship of creditor and debtor. He as the creditor had the power. So 1 quick sentence for you is like a standard mo of Jacob was the fact that he bribed everybody he would bribe emperors people work for the emperors he would bribe could have to power structure she's essentially have like the nobility and then you have the church and he would bribe everybody and he bribed the pope 1 of Jacob's trick tricks was keeping public officials on his payroll. So at this point the story he's already accumulating a lot of political power a lot of money.

Speaker 1

31:50

I want to read something because I've heard this before and I always found this fact shocking the average German in Jacob's day drank 8 glasses a day of beer. Why did he do this? This is wild to me The beer was tough on the liver, but it was safer than the water from the sewage filled streams Inside the tavern the men sat at long tables and swapped stories And this is really jumped out at me because even though he's you know kind of a jerk and somebody I wouldn't wanna hang out with, he lived a very fascinating life. His story, his life stories, like it's just, it's unbelievable the stories that are in this book.

Speaker 1

32:25

And so I really thought about it, I was like, well, how is this applicable to you and I? It's like, okay, all of us are writing a story. Maybe it's published in a book 1 day. Maybe it's just the people that are reading your story with people like your family, friends, people know you, but to write the best story that let best life story.

Speaker 1

32:40

The only way to do this to live an interesting life and Jacob lived an interesting life so much that it was obvious to other people around him that this guy had experiences that were very rare. Others may have been better storytellers than Jacob, but it's hard to imagine anyone had better material. Only Jacob could describe the emperor as a friend. The men in the room at the tavern most wanted to know the secrets of his success but his secrets weren't all that mysterious they were just hard to duplicate and so now it's going into his edge right Jacob had a remarkable talent for investing he knew better than anyone how than anyone how to size up an opportunity.

Speaker 1

33:16

He knew how to run a business and make it grow and how to get the most out of his people. He knew how to exploit weaknesses and negotiate for favorable terms. But perhaps his greatest talent was an ability to borrow the money he needed to invest. He convinced cardinals, bishops, dukes, and counts to loan him oceans of money.

Speaker 1

33:35

Without their support, Jacob would have been rich, but no richer than others at his club. The fundraising, and with it the courage to risk debtors prison if he couldn't repay, explains why he went down in history by the name Jacob the rich. Financial leverage catapulted him to the top. He borrowed in the most mundane way imaginable.

Speaker 1

33:56

He offered savings account. Now, this is this is wild. At 1 point in human history, savings account at a bank was new technology. And Jacob's 1 of the pioneers of that.

Speaker 1

34:08

He borrowed in the most mundane way imaginable. He offered savings accounts. Banks litter every street corner today, but, and they open accounts for anyone who walks in but savings accounts were new in Jacob's time But if you think about it, it also made the game He's playing very dangerous because he avoided he had a there was a few attempts. I think 2 or 3 maybe 2 Throughout where he almost had a run on his bank and he does a series of like bribing all kinds of things to get out Of that things that would be illegal today, but it would be different like a bank run You know you have FDIC insurance you have all these these like these things these like safety measures in place If he would have had a run on his bank and he couldn't fulfill it, they would have killed him.

Speaker 1

34:49

And so there's an entire chapter dedicated to this run, this potential run on his bank and how he got out of it. I'm just going to read you the summary of how this happened. And what I wrote, This is my note. This dude bribed the pope to avoid a run on his bank.

Speaker 1

35:05

That's not hyperbole. That is fact. He offered Julius, which is the pope at the time, $36, 000 to drop his claim. He promised to deposit the money in the pope's personal account rather than a church account.

Speaker 1

35:17

Julius accepted. Jacob was saved. As Jacob knew, every Pope had its price. Okay, so I want to give you a great overview that I found in the book of his life up until this point.

Speaker 1

35:29

Jacob spent the first half of his career making money. He spent the second half fighting to keep it. In the first phase, he had his greatest commercial victories. He won a silver contract, created a mining giant like this giant mining business, and put together a distribution network to sell his output to a diverse group of customers across the continent.

Speaker 1

35:46

He invested the profits in new opportunities and by doing so he created a formidable cash generation machine that year in and year out added to his net worth. This was all he ever wanted. Jacob was happiest when striking deals or scrutinizing his ledgers. Nothing gave him greater joy than the chores required to make him richer.